There are only a few of us who may have been fortunate enough in life to avoid facing the terrifying monster that is debt. But most of us? We have been there and are still there. A study done in 2022 revealed that over 55 million households in America face some kind of debt with elements such as mortgages, home equity, credit card bills and student loan balances contributing to it.
Getting into debt is a steep slope that is easy to fall down but difficult to get back up from. Sometimes it takes everything you've got to just pay bills on time and put money away for an emergency. However, if you just pay your creditors the minimal amount due, you run the risk of sliding into debt traps from which it may take you months or years to escape.
Fortunately, with a couple handy tips, a few lifestyle changes, and some elbow grease, you can begin your climb up. Your situation and financial goals determine the best strategy for you to tackle your debt with. This is why learning some useful debt relief tips can help you come up with a debt management strategy to improve your personal finances and pave the way from financial disparity to financial well-being.
Getting out of debt begins once you stop letting it intimidate you. Think of it as a hurdle, all you need to do is source some materials and come up with a strategy to jump over it. Here are some helpful tips that you can incorporate into your financial habits to start getting rid of your debt:
Think of your debt as a tangled ball of yarn. You can only untangle it by picking an end and pulling out the knots, one by one. Make a list of everything that you need to pay and when you need to do it. Declutter your finances and sort them out by prioritizing the most urgent items that are due first. By organizing your finances, it becomes easier to review your expenses, income, and loans so that you can come up with a debt repayment strategy efficiently.
A spending plan is something you should be following even if you aren't in any debt. Making a spending plan gives you guidance on where to spend and where not to. Not only does it limit your excessive spending but also encourages you to set aside money for an emergency fund in the future.
Consider your monthly expenses, including food and rent, transportation costs, essential shopping, etc and any existing debts you may have while creating your spending plan. Make a savings list as soon as you create an expense list to prevent yourself from digging further into more debt. You can also hire a financial advisor to help you evaluate your debt, spending and income and create a suitable spending plan for you.
Many people find using credit cards to buy things they need a very convenient option, but if your credit card bills aren't paid on time, falling into debt is quite easy. If you’re using a credit card, be sure to pay for your transactions early, or pay your monthly interest by the deadline. Choose what you buy with your credit card carefully because, unlike other loans, the interest rate on missed payments on credit card bills is extremely high. Consider using your credit card as little as possible until you become debt-free.
One of the best ways to tackle debts is by making extra money to pay them off instead of prolonging the deadlines. If you have a full-time job, you might find sourcing a secondary income hard. However, thanks to the internet, there are a lot of income options available that you can try with just your computer. Whether it is writing, reviewing, surveying, testing, etc, you can find freelance work online to start earning some extra money to implement in your debt pay-off plan.
If you have outstanding credit card bills that are making it hard for you to start paying off your debt, consider looking into Equated Monthly Installments (EMI). With EMI, your monthly installment payment for your credit card debt is subtracted from your overall credit card statement. By doing this, you can avoid paying any additional interest that may add up if you don't pay the outstanding bills. It’s always a good idea to seek professional financial advice before you implement any installment or payment method to pay off your debt.
Being into debt can make things overwhelming, which is why considering taking a second loan may seem like a viable option to pay off your debt. However, taking a loan to pay off your pre-existing loan takes a step back from being debt free and not towards it. Doing this will only make your finances more complicated and shackle you to your debts for a longer period of time. Unless you're 100% sure about how you’re going to pay it off, avoid taking a second loan at all costs.
Your work doesn't end at just creating a debt pay-off plan and implementing it. On the contrary, it starts there. After you have set your budget and debt pay-off plans in motion, start diligent tracking. To make sure you're progressing, keep a tight eye on your expenses and don't stray from your spending plan. Avoid any further loans until you’re sure that your expenses and debt pay-off plans are working together and not against each other. As you progress, review your spending plan and make any necessary adjustments to continue on the path toward debt repayment.
To become debt-free, you must create a strong mindset that is ready to: face what you owe head-on, make sacrifices in your expenses, and motivate yourself even when things appear challenging. A debt-free mindset will assist in keeping your life in balance, but to keep your life in balance, you must first pay off your debt. Don't be intimidated by the large numbers or the looming deadlines, instead focus on how you can follow healthy financial habits that can help get back up and resume your way toward financial stability.
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